×

Younger workers should not ignore power of 401(k) plans: Advisor

  • Financial advisor Rianka Dorsainvil counsels new workers to educate themselves about all the benefits their new employer offers — especially 401(k) savings plans.
  • Be sure to take advantage of employer match, if offered.
  • Learn which funds are the best match, or choose target-date funds if unsure.

Congratulations. You graduated from college and just landed that first full-time job.

While it's time to celebrate, it's also time to make some serious financial decisions. Rianka Dorsainvil, a millennial certified financial planner and owner of Your Greatest Contribution, has some solid advice for you: Enroll in your employer's 401(k) plan as soon as possible to save as much as you can, and spend time learning about the different options and investments your plans offer.

More from Portfolio Perspective
How to start saving for retirement in your 50s
What makes an advisor trustworthy?
Buying stock? Ask yourself this question first

Dorsainvil says it's important for everyone to understand all the benefits offered by a new employer — and at the top of the list is a 401(k) plan. She works with Gen Y clients and helps navigate them through their financial lives, urging these new investors to ask key questions to ensure they truly understand their investment options.

"A 401(k) plan can be complicated, so it's clear that people may be overwhelmed — and that's OK," she said. "Take a deep breath and just make sure you do your homework so you can fully understand the benefits of the plan your company offers."

Take advantage of a company match, if available, says Dorsainvil. Most employers that offer a 401(k) plan will match at least some of your contributions. In other words, they'll contribute free money into your retirement account if you make contributions of your own.

Younger workers should be sure to take advantage of employer-sponsored 401(k) retirement savings plans.
Franziska & Tom Werner | Getty Images
Younger workers should be sure to take advantage of employer-sponsored 401(k) retirement savings plans.

"Don't leave that free money on the table," she said. Since different employers offer different levels of matching, it's a good idea to check with the human resources representative at your firm to find out what your own company offers.

And make certain you take the time to learn what may be best for you, she said. More often than not, you can find an investment to accommodate whether you want to be more conservative or aggressive with your assets, as well as an investment that is based on how long you have to invest your money.

Your Wealth: Weekly advice on managing your money

Sign up to get Your Wealth

Please enter a valid email address
Get this delivered to your inbox, and more info about about our products and service. Privacy Policy.

Of course, if you feel clueless about the funds offered in your 401(k) plan, you're not alone, she explains. Assuming you would like to take a safe route, go with a target-date fund. These funds, which automatically adjust your relative holdings in bonds and stocks, are designed to provide a simple investment solution for investors.

The bottom line is to get that money invested as soon as possible.

"The worst thing you can do is absolutely nothing," Dorsainvil said.

Latest Special Reports

  • A globe-trotting look at the world of investing, from developed Europe and Asia trends to the least-traveled frontier markets.

  • Unlock the keys to building a successful long-term financial plan: manage your money, grow your money, and protect it.

  • Watch investments

    Covering the full set of tools and strategies for long-term investors: How to take everyday market fluctuations in stride, and when to know it’s time to take action or protect against a major economic shifts.

Investing

Financial Advisors